Thursday, May 30, 2013

(Business) China: Tapering off?

China have long been tipped to
overtake the United States as world’s largest economy and premier superpower
however of late China has experienced a notable slowdown underlined by the
unexpected growth shown by the Philippines as the nation beat into second
achieving 7.8 per cent growth to china’s 7.7 in the first quarter[1]
. This compounds a less than fantastic week for the country as yesterday the
IMF reduced it forecast for china’s pointing to the slowdown in exports[2].
While this may appear to represent not much in the way of decline, a trend is
clearly developing as while China is at a solid
7.7 percent, it was 7.8 just a year ago which was “its slowest rate for
13 years”[3].

While China’s current slowdown
owes largely to the current state of the global economy, China has experienced
a slump in its manufacturing, which has been at the heart of China growth over
the last three decades as “factory activity had contracted for the first time
in seven months”[4].

However while its economy has experienced
a slight decline, its growth is still strong in comparison counterparts in the
west however China, if not careful, could end up making the mistake many
nations, especially in the west, have made in failing to deal a job market that at once cannot match its demand and
favours experience over youth.

China has not escaped the
global macro trend of the world becoming no place for young men and women looking
to succeed and support themselves as it job market has slowed. Reuters’ Didi
Tang chronicles the struggle of chemistry graduate Jiang Wenying who may have
consider other options having “sent out more than 1,000 job applications,
netting no more than 10 interviews and not a single job offer”[5].
This can only be bad news for China down the road as Jiang is one of the nearly
seven million graduates who “are leaving universities and graduate schools to
seek their first job” only to find that it may not exist[6].

This trend can have real political
implications as it has in numerous countries who have paid no attention to
creating a job market that’s friendly to the young as many of the graduates are
the sons and daughters of China growing urban middle class which have started
to find its voice.

In sum, China may end up
becoming the world’s biggest economy as its rate of growth has been one of the
highest in the world for two decades straight but as faces a number of problems
owing to the state of the global economy and number of problems with labour
policy and job market which could have political as well as economic
implications, it may have to wait a little bit longer.